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16 January 2013

Farm Subsidies, Haitian Farmers and Development Policy

A lot of critical reporting on Haiti has focused on the republic of NGOs and unmet aid pledges. Maura O'Connor highlights the damage caused by US farm subsidies in Foreign Policy.

While this prospect is a bleak one for the domestic rice industry, others view it as a long-overdue change. For years, organizations from Oxfam to the Cato Institute have harshly criticized American rice subsidies for enabling the United States to dump its product in developing countries at depressed prices, making it difficult for small-scale farmers to export their own rice or compete in their local markets. As these critics see it, taxpayer dollars have inflated America's competitiveness in global markets while destroying agriculture sectors in countries from Ghana to Indonesia.

Perhaps the most devastating example of this trade distortion, critics say, is Haiti. Since 1995, when it dropped its import tariffs on rice from 50 to 3 percent as part of a structural adjustment program run by the International Monetary Fund (IMF) and World Bank, Haiti has steadily increased its imports of rice from the north. Today it is the fifth-largest importer of American rice in the world despite having a population of just 10 million. Much of Haiti's rice comes from Arkansas; each year, Riceland Foods and Producers Rice Mill send millions of tons of rice down the Mississippi river on barges to New Orleans, where the rice is loaded onto container ships, taken to port in Haiti, and packaged as popular brands such as Tchaco or Mega Rice. Haiti today imports over 80 percent of its rice from the United States, making it a critical market for farmers in Arkansas.

O'Connor does a nice job covering the problem at hand and the challenges to rectify it. In short, subsidize rice in the US undercuts the Haitian market which helps in terms of food security, but harms the growth of agriculture in the country. Cutting the farm subsidy could help Haitian farmers out, but it also can lead to a sharp price increase and leave the door open for a country like Brazil to flood the Haitian markets with cheap grains.